This appeal involves a claim by plaintiff, a retired employee of defendant, that a provision of the latter's private pension plan reducing the amount of the pension payable to the extent of any benefits under the Workmen's Compensation Law received by the pensioner after retirement is invalid as against public policy. The case was tried in the Burlington County Court, Law Division, without a jury on a stipulation of facts. Defendant had judgment there and plaintiff appealed to the Appellate Division. We certified the case on our own motion while it was pending in that tribunal. R.R. 1:10-1(a).

On March 1, 1955 plaintiff, who had then been employed by defendant at its Burlington plant for about 19 years, injured his left leg at work in a compensable accident. Thereafter he filed a claim petition for benefits under the Workmen's Compensation Act. On April 1, 1955 he was retired from employment pursuant to the company's pension plan, having attained the age of 65. The accident had no connection with his retirement.

The pension plan derived from a collective bargaining labor agreement between defendant and the United Steelworkers

of America, the exclusive bargaining agent of defendant's production and maintenance employees who were associated as a local unit of the union. The plan was originally agreed to March 1, 1950. It was revised as set forth in a formal agreement executed by the local union and defendant effective March 1, 1955, to expire concurrently with the basic labor agreement between the company and the union. We are concerned on this appeal with certain provisions of this latter instrument. We are given to understand that it was, at its effective date, standard throughout the steel industry.

The contract provided that any employee retiring on or after the effective date with at least 15 years of continuous service and having attained the age of 65 should be entitled to receive a pension. It also provided for a pension for disability for any employee with the same period of continuous service who had not reached the age of 65 but who had become "through some unavoidable cause permanently incapacitated." Retirement was made compulsory in any event at age 65.

Specified in the agreement was a formula on which the amount of the pension was to be determined in each case. Generally speaking, it was to be on a monthly basis computed on a percentage of the average monthly earnings of the employee over a designated period before retirement. It was non-contributory as far as the employee was concerned, all moneys being provided by the company. The latter was required to arrange for funding of all matured pensions on a sound actuarial basis, by establishment of a trust fund or insurance or both, in order to secure the payment of pensions during the remainder of the life of retiring employees. The plan was to be administered solely by the employer, and it was specifically prescribed that no employee prior to eligibility for benefits would have any right or interest in or to any portion of any funds paid into any trust or annuity that might be established to pay pensions.

It was further provided that the amount of an individual pension payable according to the formula was subject to reduction or adjustment under certain conditions, which fell into three categories:

1. The amount of the pension for any period was to be reduced by the amount of any other pension, annuity or similar payment to which the pensioner was entitled, whether applied for or not, from any public source (with the exception of pensions granted for military service or payments under the state law pursuant to Title I of the Social Security Act, 42 U.S.C.A. § 301 et seq.), or from any other source to which the company had contributed. If the pensioner had also contributed to the fund out of which an "other source" pension was payable, the reduction was to be decreased based on the ratio his contributions bore thereto. It was also specified that the reduction by reason of primary old age insurance benefits provided by Title II of the Social Security Act, 42 U.S.C.A. § 401 et seq. should be limited to $85 per month.

2. If the pensioner was or should become entitled to or be paid "any discharge, liquidation or dismissal or severance allowance or payment of similar kind" under any plan of the company, or as to which it had contributed, or by reason of any statute, the total amount so paid or payable was to be deducted from the amount of any ...

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